The Business Plan -- Don't Start Without One

The rule when you need to borrow money to grow your business is that you show the potential lender your Business Plan. Yet the business plan requirement remains an argued topic year after year. The outlines of what must be included in the plan are clear, and in principal, people agree it is important that you have thought through the choices a plan defines. But the tough part, especially for first-time entrepreneurs, is the financial projection!

Cathy Curtis of Curtis Financial took on this subject in one of the first posts in her Curtis Financial Planning blog. She hosted a panel discussion of four women in the food business at San Francisco's Commonwealth Club recently. The topic was, "To Plan or Not to Plan".  The four panelists had produced the obligatory business plan at the start, but each quickly became irrelevant as reality intruded.

You could judge that the time spent on a business plan is also irrelevant, but Curtis begs to differ. She says:

I have no doubt that these amazing women will succeed. Street smarts and passion can take a business a long way. However, as a financial planner I see what bootstrapping can do to a business owner’s personal finances and I am duty bound to counsel caution. Here are  my three reasons why you should consider developing a business plan.

Writing a business plan compels you write down the numbers and
decide which are most important to your particular business – then it’s
up to you to watch them like a hawk.

Taking shortcuts doesn’t work when it comes to growing a business.
Writing a plan helps you to think strategically and decide what’s best for the company in the long term. This can even include an exit strategy.

Assumptions change and circumstances change, but don’t make that an excuse to avoid having a plan.  Even if you launched on sheer gut instinct, step back and create a plan now. You’ll be rewarded with clarity and peace of mind.

Comments

[Cathy Curtis]

Mary,

Thank you for referencing my blog post! I so agree with you that the financial projections are the toughest part. But they are also the most important part. I have many clients who are entrepreneurs. I need to know their income in order to produce a financial plan. When I ask for 5 year projections many say "I have no idea." But, I don't let them off the hook with this answer. I say - let's do an estimated projection...you can always revise. It is painful, but very necessary. If an entrepreneur has "no idea" of their future income, how can you run a business?